Which is better, the carrot…or the stick? When it comes to getting businesses to adopt clean energy policies, a new study says… the carrot.

A Cap and Trade system or carrot works better than the Carbon
Tax...or stick according to a study conducted in part by
University of California Merced professor, Yihsu
Chen.

Under Cap and Trade, permits that allow businesses to continue
to emit carbon are sold on a permit market which is similar to the
stock market. Chen, says because businesses can time
when they purchase those permits, and when they invest in new
technology, they can maximize profits. On the other hand, a
tax just punishes businesses that emit too much carbon.

The study found a coal-powered business could convert to
natural gas under cap and trade for about 50 dollars a ton less
than it would cost to keep the plant coal-powered and pay a Carbon
Tax.

The study was co-authored by University of New South Wales'
professor, Chung-Li Tseng.